Return migration and labour market outcomes in South Asia: a CGE exploration

ABSTRACT

This paper explores the impact of return migration on labour market outcomes, more specifically, wage, consumption and welfare outcomes for workers in South Asia. The unprecedented changes brought about by the pandemic have led to mass upheaval and the return migration of millions of workers over the past two years. This return migration is likely to lead to an expansion of the labour force and employment in South Asia. The impact of this labour force supply shock is evaluated using the GMig2 version of the GTAP model. We find heterogeneous results in terms of labour returns by levels of skill and industry. The sectoral demand composition changes with manufacturing and services gaining demand over agriculture and primary industries.

KEYWORDS:

• Return migration
• labour market
• skill level

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 This paper uses the United Nations Department of Economic and Social Affairs (UN DESA) classification of Southern Asia as consisting of the following countries: Afghanistan, Bangladesh, Bhutan, India, Iran, Maldives, Nepal, Pakistan and Sri Lanka. The coverage of actual countries for particular analysis is based on availability of data.

2 World Bank World Development Indicators Database.

3 The 4th largest country in the region is Iran which has a lower number of emigrants than the other countries. However, it is one of the large destinations of migrants with many refugees from Afghanistan.

4 E.g. In the case of Malaysia and Singapore, the cumulative duration of stay is limited to 10 years for low-skilled migrants. In Qatar, there is a restriction on the number of work permit renewals allowed which leads to most stays lasting shorter than 6 years. In Saudi Arabia, the permits are required to be renewed every year but work contracts normally last 2 years (World Bank 2020).

5 They point out to four exceptions: Arif (1998) and Ilahi (1999) for Pakistan and Bossavie et al. (2021) and Farole et al. (2017) for Bangladesh.

6 Available here at: https://www.knomad.org